UK directors disqualified for failing to maintain adequate accounting records

 Corporate Insolvency, Insolvency Law, Insolvency practices, Records Management, Regulation, White collar crime  Comments Off on UK directors disqualified for failing to maintain adequate accounting records
Jan 102014
 

Encouraging news.  According to an article published on insolvencynews.com on 9 January 2014, the United Kingdom insolvency authority has banned the directors of two unrelated companies from acting as company directors for failing to maintain adequate accounting records:

“The directors of two unrelated companies have been banned from acting as company directors for failing to maintain adequate accounting records.

The disqualifications, which followed investigations by The (UK) Insolvency Service, were handed to Bradley Carter of Dr Spafish Limited, and Alan Coffey of Datadesk Computer Services Limited.

Carter, whose company offered fish pedicures and also sold franchises, was banned for seven years. Spafish began trading in August 2010 and went into liquidation on 28 November 2011, owing £788,968 to creditors.

The investigation found that due to the lack of available accounting records, it was unable to determine the company’s turnover, who benefitted from cheques and cash worth £181,953 withdrawn from the company’s bank account, and what happened to £68,100 received as part payments for franchise.

Neither was it possible for the investigation to determine the full extent of losses incurred by customers or who these customers were.

Mark Bruce, a chief examiner at The Insolvency Service said: “Company directors must keep sufficient financial records that show and explain the company’s transactions.

“This director failed to do this and there remain a large number of unexplained transactions, representing significant amounts, over the company’s trading period.”

Coffery of Datadesk Computer Services, which operated as supplier of office and technology equipment, was also disqualified for seven years, at Airdrie Sheriff Court in Scotland.

The investigation found that the lack of proper accounting records meant it was not possible to verify if £312,266 paid out of the bank account was for the benefit of the company.

This included over £123,141 paid to a company which holds petroleum exploration and extraction rights in Sierra Leone, West Africa and £26,000 paid for the purchase of coffee and related products. In addition, there were unexplained cheque payments totalling £79,038.

The company entered liquidation on 3 February 2012.

Robert Clarke, head of insolvent investigations north, at The Insolvency Service, said: “The lack of records in this case made it impossible to determine whether there was other, more serious, misconduct at Datadesk and that is reflected in the lengthy period of disqualification.”

Draft laws released on director liability for unpaid super

 Employee Entitlements, Insolvency Laws, Insolvency practices, Priority Debts, Taxation Issues, White collar crime  Comments Off on Draft laws released on director liability for unpaid super
Jul 142011
 

Draft Australian tax laws intended “to better protect workers’ entitlements to superannuation, strengthen director obligations and enhance deterrence of fraudulent phoenix activity” were released on 5 July 2011 for public consultation. Treasury states that: 

” The main aspects of these amendments involve:

  • extending the director penalty regime beyond its current application to Pay As You Go (PAYG) withholding to make directors personally liable for their company’s unpaid superannuation guarantee amounts;

  • allowing the Commissioner of Taxation (the Commissioner) to immediately commence recovery of all director penalties when the company’s unpaid liability remains unpaid and unreported three months after the due day, regardless of the character of the company’s underlying liability; and

  • providing the Commissioner with the discretion to prevent directors and, in some instances their associates, from obtaining PAYG withholding credits where the company has failed to pay amounts withheld to the Commissioner.”

To see the Explanatory Memorandum and/or the Exposure Draft Legislation CLICK HERE.

Closing date for submissions: Monday, 1 August 2011

I intend to write more about this soon.

Director concedes defeat

 ASIC, Offences, Regulation, White collar crime  Comments Off on Director concedes defeat
Feb 232011
 

It took almost 3 years, but insolvency fraud charges brought by the Commonwealth Director of Public Prosecutions (CDPP) against company director, Paul Michael Belousoff, concluded on 21 February 2011 with a guilty plea and the court ordering he serve a prison sentence.

Back in August 2005 two of Mr Belousoff’s companies – namely, Index Options (Australia) Pty Ltd and Bel Investments Pty Ltd – were placed into liquidation by order of the Court.

In 2006 Mr Belousoff was convicted in the Magistrates Court of offences brought by the Australian Securities and Investments Commission (ASIC) under section 475 and 530A of the Corporations Act (failure to submit a report as to affairsto the liquidator and failure to supply the liquidator with the books) in respect of both of his companies.  He was fined a total of $2,900.

In July 2006 the liquidator was granted an order by the Victorian Supreme Court  that the liquidator be  appointed as receiver of the Index Options Trust for the purpose of preserving its assets.  In his judgment Justice Whelan said:

 “It suffices to say that in my view the liquidator’s material establishes that Mr Belousoff was responsible for a serious failure to keep proper books and records and that there are grounds for serious concern that he was also responsible for the payment over of substantial funds of Index Options or the Index Options Trust in a most improvident manner.”

Later, in April 2008, Mr Belousoff was charged with eight counts of engaging in conduct that resulted in the fraudulent concealment or removal of company property and one count of fraudulently making a material omission in a report as to affairs.

These frauds came to the attention of ASIC through a liquidator’s report, which was prepared with funds provided to the liquidator from ASIC’s Assetless Administration Fund (AA Fund).

The liquidator, ASIC and the Commonwealth DPP claimed that after the liquidator was appointed,-  Mr Belousoff  fraudulently removed or concealed in excess of $1 million worth of property belonging to the two companies.

In September 2008 ASIC disqualified Mr Belousoff from managing corporations for five years because of his involvement with two failed companies.

On 31 January 2011 Mr Paul Belousoff pleaded guilty to all of the charges brought in April 2008. On 21 February 2011 the Court sentenced Mr Belousoff to a term of 11 months imprisonment, but that he be released after serving three months on the condition that he be of good behaviour for three years.